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The fate of a controversial import tax in the House tax overhaul plan now rests with
the White House after pointed criticism from several Republican senators in the past
week.

House Speaker Paul D. Ryan (R-Wis.), Ways and Means Chairman Kevin Brady (R-Texas)
and other supporters, who have been backed into a corner about the 20 percent import
tax, now have their hopes set on President Donald Trump.

Trump has been ambivalent about his support for the border adjustability proposal,
although more clarity is expected when the White House announces its tax plan in the
coming weeks. “Even if the president endorses it, it may only mean that they can get
it out of committee and maybe through the House, not through the Senate,”
a tax lobbyist told Bloomberg BNA.

White House press secretary Sean Spicer told reporters Feb. 21 that a tax plan was
expected in the “next couple of weeks.” Observers are also expecting more clues at
the Conservative Political Action Conference in Maryland this week, where Trump, Brady
and a number of officials from the president’s administration are expected to speak.
In addition, Trump will address a joint session of Congress Feb. 28, and there has
been some speculation that he might unveil elements of his tax plan during that speech.

Trump’s tax outline, when it is released, could be the idea that the Senate runs with,
said Gary Clyde Hufbauer, a Reginald Jones senior fellow at the Peterson Institute
for International Economics.

“A big priority is to have it in effect in 2018. Without this, I don’t see them getting
near the target 3 to 3.5 percent growth,” Hufbauer said. “If they want to reach it
in time for it to have some effect for the 2018 election, they need to get things
humming six months before the election. Boy, that’s critical. The timing cannot be
overstated. The Republicans won’t be the majority party anymore unless they move briskly.”

Senate Stop

The Ryan-Brady tax reform plan has run into significant opposition in the Senate,
where a number of top Republicans have continued to openly question the merits of
the import tax.

Sen. Lindsey Graham (R-S.C.) said Feb. 19 on CBS’s “Face the Nation” that the House
tax plan “won’t get 10 votes in the Senate.”

And Sen. Tom Cotton (R-Ark.), a rising Republican star and a potential presidential
candidate, told Bloomberg BNA that he doesn’t think the Senate “should sit back passively
and let the House send us some half-baked idea as a take it or leave it proposition.”

Hearts and Minds

The debate over the border tax also pits U.S. companies against each other as they
stake out positions for or against the issue. The American Made Coalition, a group
of companies supporting the border adjustment tax, sent a
letter to congressional leaders Feb. 21.

“This reform is consistent with the tax policies of nearly every other country in
the world, and it would effectively end the ‘Made in America’ tax that creates an
unfair advantage for foreign-based companies at the expense of U.S. jobs and economic
growth,” the coalition said. The letter was signed by 16 chief executive officers,
including those from General Electric Co., Dow Chemical Co. and Boeing Co.

The letter called the border tax a “critical element” of the House plan, which would
lower business tax rates, allow immediate expensing of capital spending and establish
a territorial tax system.

The same day, a group called the Americans for Affordable Products, made up of more
than 150 businesses and trade groups including Wal-Mart Stores Inc. and Best Buy Co.,
said that many of the companies in the American Made Coalition pay an effective tax
rate that is significantly lower than the statutory rate.

These companies “are asking consumers to pay more so that they can pay even less,”
an e-mail from Americans for Affordable Products said.

With assistance from Laura Davison and Cheryl Bolen in Washington.

To contact the reporter on this story: Kaustuv Basu in Washington at
kbasu@bna.com

To contact the editor responsible for this story:
Meg Shreve at
mshreve@bna.com

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